Pricing/Valuation - ACA Insight Newsletter

SEC and CFTC Settle Mispricing Charges with Hedge Fund Portfolio Manager

August 2, 2019
Regulators take improper valuation and mispricing seriously, particularly when the party accused of doing so also allegedly tried to hide his actions. An advisory firm and commodity pool operator portfolio manager found this out the hard way after reaching settlements with both the SEC and the CFTC that together left him almost $850,000 poorer and barred from both the securities industry and futures trading for at least three years.

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Keep Fiduciary Duty and Conflicts of Interest in Mind During Transactions

March 22, 2019
It sounds like the classic conflict of interest: An advisory firm manages both the seller and multiple prospective buyers in a real estate asset transaction. How can such an adviser possibly get the best possible deal for its clients on both sides?

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Advisers Need to Stay on Top of Client Allocations and Valuations

January 23, 2019
Advisory firms that allocate expenses to clients contrary to written agreements should be prepared to face the possibility of an SEC investigation and enforcement action. That possiblity is magnified if the same firm is found to have improperly conducted reviews of client valuation models.

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SEC Settles with Valuation Firm in Latest Example of Gatekeeper Scrutiny

October 20, 2017
The SEC under former chair Mary Jo White stated quite clearly that it would take enforcement action not only against advisers and funds, but also against those it termed "gatekeepers:" attorneys, accountants, consultants and others. The agency�s recent settlement with a firm providing valuation services shows that scrutiny is alive and well under chair Jay Clayton.

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Failure to Base Valuation on Reasonable Assumptions May Lead to SEC Charges

August 4, 2017
An adviser may believe in the value of a portfolio company. But when the adviser managing private funds with an interest in that company seeks investors for that company by overstating the portfolio company�s and therefore the funds� value, expect the SEC to come knocking.

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Valuation: Make Sure Third-Party Pricing Vendors Follow Industry Standards

April 7, 2017
Advisory firms may turn to third-party pricing services to provide valuation expertise that the adviser lacks. Don�t let that claim of "expertise" stop you from considering how that third party will performs its job before retaining it, however. Failure to do so may result in more than some unpleasant numbers � as one advisory firm found out.

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Adviser Settles Fair Value Calculation and Error Correction Allegations

October 21, 2016
If you�re going to fix a problem, make sure your fix will not land you in further trouble. That may be what one mutual fund adviser Calvert Investment Management is thinking after its October 18 settlement with the SEC.

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Multiple Disclosure Issues Lead to Enforcement Against Hedge Fund Manager

February 5, 2016
Disclosure is a basic requirement of most SEC regulations. If you want a visit by the SEC, failure to disclose, particularly when it occurs more than once, is one of the best ways to ensure that you get one.

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SEC Valuation Settlement Zeroes In On Start-up Purchases

January 29, 2016
Valuation remains a hot-button issue with the SEC. Consider the agency�s January 14 settlement with an investment company over charges that the fund unreasonably overstated the value of its interests in two companies it purchased, and that it misrepresented its valuation policy in doing so.

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Beware the Slippery Slope of Valuation Shortcuts

July 17, 2015
A hedge fund adviser its two owners on July 1 settled agency claims that they fraudulently inflated the value of client holdings in order to collect higher management and performance fees.

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Valuation: What Examiners Want to Know

May 1, 2015
Examiners follow the money. Valuation is where the money starts. Private funds in particular need to be concerned about examiner inquiries into valuation. Hedge fund managers have part of their compensation tied to the value of their portfolio. Private equity fund managers may want the NAV of their funds to be as high as possible when raising additional capital.

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Adviser Wants Trial by Jury: Tilton Sues SEC over Administrative Action

April 10, 2015
The SEC on March 30 filed an order instituting an administrative proceeding against advisory firm CEO Lynn Tilton. The agency claimed that Tilton and her Patriarch Partners advisory firms, which invest in distressed companies, misappropriated almost $200 million from clients by mischaracterizing the performance of fund assets.

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